In anticipation of the institution of these proceedings, Chiquita has submitted an Offer of Settlement ("Offer") that the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission, or to which the Commission is a party, and prior to a hearing and without admitting or denying the findings contained herein, except as to jurisdiction over it and over the subject matter of this proceeding, which Chiquita admits, Chiquita consents to the entry of this Order Instituting Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order ("Order"). The Commission has determined that it is appropriate to accept the Offer from Chiquita, and accordingly is issuing this Order.1

III.

Based on the foregoing, the Commission finds that:

A. Respondent

Chiquita Brands International, Inc. is a New Jersey corporation with its headquarters in Cincinnati, Ohio. The common stock of Chiquita is registered with the Commission pursuant to Section 12(b) of the Exchange Act and is listed on the New York Stock Exchange.

B. Other Relevant Entities and Persons

C.I. Bananos de Exportacion S.A. ("Banadex") is an indirectly wholly-owned subsidiary of Chiquita with its headquarters in Medellin, Colombia. Banadex indirectly reports to Chiquita.

Comercio Exterior Asesores Limitada ("CEA") is a Colombian entity licensed by the Colombian government to act as an intermediary between corporations and Colombian customs officials.

C. Facts

Chiquita's Colombian operations consist of, among other things, a number of banana farms located throughout the country and an import/export port facility located in Turbo. The Turbo port facility is owned and operated by Banadex, an indirect wholly-owned subsidiary of Chiquita. Beginning in 1993, the Colombian government licensed the Turbo facility as a location where goods could be stored pending inspection by customs officials.

In 1995, the Colombian government issued a decree requiring all current license holders to submit renewal applications. Banadex learned of the decree through CEA, its intermediary with Colombian customs. Under Colombian law, companies are required to hire licensed customs brokers who interact with customs officials on behalf of the company.

In September 1995, the Banadex employee in charge of material and supplies advised Banadex management that renewal of the port facility's customs license was in jeopardy because of two previous citations for failure to comply with Colombian customs regulations. The employee further advised management that replacing the Turbo facility would cost approximately $1 million. Without the knowledge or consent of any Chiquita employee and in contravention of Chiquita's policies, Banadex's chief administrative officer authorized Banadex's CEA agent to make a payment to Colombian customs officials to obtain the license renewal. The chief administrative officer directed Banadex's security officer and controller to make and process the payment.

Banadex's CEA agent later advised the company that for the Colombian peso equivalent of approximately $30,000 the citations would be overlooked and the license renewal granted. Banadex agreed to pay two installments - approximately $18,000 in advance and the remainder after renewal. Both installments were made by Banadex's security officer from a Banadex account used for discretionary expenses. The initial installment was incorrectly identified in the company's books and records as a maritime donation ("Donacion Maritima"). The second installment was incorrectly identified as relating to a maritime agreement ("Acuerdo Maritima"). Banadex did not request permission from, or otherwise inform, any Chiquita employee within the United States regarding the transaction.

Chiquita's policies and procedures contain strict guidelines regarding the use of a discretionary expenses account. Banadex did not comply with Chiquita's procedure requiring that Banadex's books and records accurately reflect the transaction. During 1996, Chiquita's internal auditing staff made management aware of a number of instances in which Banadex had not provided documentation required by Chiquita's internal accounting control procedures regarding discretionary expenses.

Chiquita had strict policies prohibiting payments of the kind made to the customs officials. To monitor and enforce those policies, Chiquita required quarterly identification and disclosure of all payments to government officials or employees, political candidates, or political parties. Contrary to Chiquita's established procedure, Banadex employees failed to identify and disclose the payment to customs officials on the disclosure forms submitted for the relevant quarters.

In April 1997, Chiquita internal audit discovered the September 1996 payment during an audit review of Banadex. After conducting an internal investigation, Chiquita took corrective action, which included terminating the responsible Banadex employees and reinforcing its internal controls with respect to its Colombian operations.

IV.

Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, the "books and records" and "internal controls" provisions of the Foreign Corrupt Practices Act, require reporting companies to make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect their transactions and disposition of assets, and to devise and maintain a reasonable system of internal accounting controls. Such companies are also responsible for ensuring that their wholly-owned foreign subsidiaries comply with Sections 13(b)(2)(A) and 13(b)(2)(B).

Based upon the foregoing, the Commission concludes that Banadex employees made inaccurate entries in the documents recording the transaction and Banadex's general ledger to conceal the payment to customs officials. These inaccurate entries by Banadex constitute a violation by Chiquita of Section 13(b)(2)(A) by failing to maintain books and records which accurately reflected Banadex's transactions and dispositions of assets. The Commission further finds that Chiquita violated Section 13(b)(2)(B) by failing to maintain a system of internal accounting controls to ensure that Banadex's books and records accurately and fairly reflected the disposition of Banadex's assets.

V.

Based upon the foregoing, the Commission deems it appropriate to accept the Offer submitted by Chiquita.

Accordingly, IT IS HEREBY ORDERED, pursuant to Section 21C of the Exchange Act, that Chiquita cease and desist from committing or causing any violation, and committing or causing any future violation, of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.